by Nicasio Angelo Agustin
Malacañang has increased the proposed 2010 national budget to P1.54 trillion, eight percent, or P115 billion, higher than the approved 2009 General Appropriations Act (GAA). According to DBM Secretary Rolando Andaya, the proposed 2010 budget will be submitted to Congress for deliberation. The Speaker of the House promised that budget deliberations would be done immediately and assured that the 2010 GAA will be out on time, and this implies that there will be no reenacted budget next year.
The P1.54-trillion budget is expected to sustain the economic rebound and help the government complete its infrastructure projects, develop human capital and well-being, and spur farm activity. Just to provide you a glimpse of the proposal, roughly one-third of the MOOE of the proposed budget – or P340.8 billion – has been set aside to pay for the country’s financial obligations, both domestic and foreign. Social services get a share of one-third of the MOOE, which includes P235 billion for education and manpower and P101 billion for social security and welfare. A total of P10 billion was also allocated for direct cash transfers to some 700,000 poorest of the poor families.
Economic services get a share of P356 billion, under the MOOE, with defense getting P73.6 billion, and general public services P275.1 billion. Some P494 billion has been allotted for salaries, pensions, and premium contributions for government personnel, up from P423 billion this year.
Capital outlays (CO), which include portions of the IRA for local governments, was given a P235 billion in funds next year. Of the infrastructure budget, P72 billion will be spent on roads and bridges, P5.8 billion on new school buildings, P27.6 billion for farm infrastructure, and P1.5 billion for bringing clean water to poor communities.
The proposed budget is based on some critical assumptions: (a) a budget deficit of P233.4 billion, which is 2.8 percent of the country’s projected gross domestic product (GDP) for 2010; (b) a growth target of 2.6-3.6 percent; (c) an inflation rate of 3.5-5.5 percent; (d) a Dubai crude oil price range of $60-$80 per barrel; and (e) a population of 94.01 million.
Looking at this year’s budget (2009), some critical assumptions were also set. The 2009 budget is P1.415 trillion pesos, which assumes a budget deficit of P40 billion pesos when the budget was still being presented for approval. Likewise; the 2009 budget assumes the economy would expand 6.1-7.1 percent and that annual inflation would slow to 6-8 percent!
Early this year, many questioned these assumptions, but the government keeps defending these figures. In May 2009, however, the administration abandoned its goal of balancing the budget in 2009 with a justification that it has to spend more on various subsidies aimed at helping weaker sections of society cope with rising inflation. It has also abandoned its initial growth forecasts and adjusted its targets and assumptions. Fine! Middle of this year the government adjusted its goal and said that the full-year budget deficit would now be P40 to 75 billion and it has put off balancing the budget until 2010.
Then again in June 2009, the government declared that the budget deficit would be maintained at P250 billion pesos, which would stand at 3.2 percent of the GDP, for the whole year. As of end of July, the seven-month budget deficit has reached P188 billion pesos, which is almost 75 percent of the adjusted full-year budget short fall of P250 billion.
What brought about the adjustments of figures and assumptions? There are only two (2) major and obvious reasons. One, the economic expansion slowed down or even contracted, compared to initial forecasts made when the 2009 budget was still being presented for approval. Two, tax and revenue collections also slowed down. These two (2) areas were unable to meet their targets, and they are not supposed to be blamed because they were greatly and significantly affected by the persistent global recession!
One of my friends commented that “hindi ba natin alam yan dati pa?” Another exclaimed that “we could have used more realistic figures for our assumptions so that we could meet our targets”. It is nice that we have a positive outlook — that we can project a good picture for the future. The sad thing is that we change that picture or image too soon when reality strikes.
We hope that in 2010, things will be a lot better. But the reality is – someone is making the assumptions now for someone who will be facing the realities middle of 2010. We can then expect that targets won’t be met again… unless we change the assumptions…yet again.
Feel free to send your comments to nic_agustin@yahoo.com.
